Mike King writes an article for The Motley Fool where he says that the SMSF sector is not only growing in numbers but also in average worth. Growing as much as 23% over the last 5 years, the average SMSF boasts of $1 million in assets. The median balance is $603,000. SMSFs now hold close to $590 billion in asset which is approximately 29% of the entire Super pool, estimated at $2 trillion.
Young members joining in bigger numbers
One of the emerging trends is the introduction of a lot of young members into the SMSF space. The median age has fallen below the 50-year mark for the SMSF sector.
Average worth of SMSF members
To come back to the average worth, there are 210,000 investors who have more than a million in their Superannuation. Out of this, about 66% or 140,000 have chosen the SMSF vehicle for themselves. King says that Australians are showing great penchant for local equities, cash and term deposits. Another interesting trend observed is that the local equities preferred are the big-cap ones; preferably Telstra and the four big banks.
A general myth about SMSF investment
The myth about SMSFs going crazy for negatively geared properties is just that, a myth. Truth be told, only 2.4% of SMSF assets are going into the residential property market. This undermines the recommendations of the Financial System Inquiry, which believes that limited recourse borrowing undertaken by the SMSFs for buying residential property must stop (to note, it is a proposal the government has made light of).
You can read the original article here.
Interestingly, the difference between the median and the average is huge. This can be put down to a few disproportionately high and low holdings that impact the median readings.
It is quite heartening to note the entry of young members into the SMSF space because this means that Young Australia is thinking seriously about retirement planning. Self-managed needs to pass the Sole Purpose Test that says money invested in this sector should be used only for the purpose of meting out retirement needs. Young investors understand this and yet they are choosing this investment vehicle over others. This is a certain cause for cheering.